Deductions under a notice pursuant to section 72A

A notice pursuant to section 72A or a section 72A notice means that some of the money you would normally pay to your employee or contractor must be paid to us.

If you receive a section 72A notice, you are legally required to deduct the amount of child support we ask you to.

How much child support to deduct

The section 72A notice will state the amount of money you will need to pay us. It may ask you to pay a lump sum amount, periodic amounts or a cents in the dollar amount. The notice will usually remain valid until a specified total amount of money has been paid.

A section 72A notice is valid even if you do not currently owe your employee or contractor any money. If you owe the person money in the future, money must be deducted the next time you pay them.

For each deduction you make under a section 72A notice:

  1. check the notice for the amount to be deducted
  2. deduct any tax from the gross payment, excluding GST, before child support deductions
  3. deduct the lump sum amount requested or, if the notice asks for a cents in the dollar amount, calculate the deduction on the person’s gross payment, excluding GST
  4. send the deductions to us within 7 days
  5. the remaining pay can be paid to the person or used to make other deductions from their pay

You cannot change the amount we have asked you to deduct unless we send you a letter withdrawing the section 72A notice or a new notice pursuant to section 72A for the same person.

If you receive:

  • more than 1 notice from us, for example, a notice from Centrelink followed by 1 from Child Support, you should comply with the notices in the order in which they are received
  • a notice from us requesting child support and a notice from someone else requesting money, you should call us for advice specific to your situation, or
  • a notice requesting child support from us and a court order requesting funds for child support or any other reason, you should call us for advice specific to your situation

If you are deducting from more than 1 person’s wage, you need to give us a breakdown of the total deductions you pay us along with the report of any deduction variations. If you are registered for Child Support Business Online Services, you can report the variation online. Otherwise you can let us know by phone or by posting or faxing a Child Support Deduction Report.

Bpay is the preferred method of payment for Section 72A Notices. However, if you are paying by cheque and you are only deducting for one person, use the Section 72A Notice – remittance slip for employers form.

Examples of how to calculate deductions

Tax amounts quoted are examples only. Refer to the Australian Taxation Office for rates applicable to your employee.

Example 1 - cents in the dollar amount deductions

The person is paid $450 excluding GST.

The Section 72A notice requires you to deduct 15 cents in the dollar.

Total payment $450
Tax deducted $24.00
Deducted child support
$450.00 x $0.15
$67.50
Pay remaining $358.50

Child support must be calculated on the gross payment excluding GST.

If there are insufficient funds to cover the required child support and tax deductions, the full amount of tax should be deducted first.

Tax amounts quoted are examples only. Refer to the Australian Taxation Office for rates applicable to your employee.

The amount should be paid to us within 7 days of making the deductions.

Example 2 - periodic amount deductions

The person usually receives payments of between $300 and $500 excluding GST each week for work done.

The Section 72A notice requires you to deduct $110 per week.

In the first week the employee or contractor earns $500
In the second week the employee or contractor earns $450
In the third week the employee or contractor earns $90

Week 1

Total payment $500
Tax deducted $38
Deducted child support $110
Pay remaining $352

Week 2

Tax deducted $24
Deducted child support $110
Pay remaining $316

Week 3

Total payment $90
Tax deducted $0
Deducted child support $90
Pay remaining $0

In Week 3, as you are unable to deduct the full $110, you can only deduct the $90 paid.

If there are insufficient funds to cover the required child support and tax deductions, the full amount of tax should be deducted first.

Tax amounts quoted are examples only. Refer to the Australian Taxation Office for rates applicable to your employee.

Example 3 - lump sum termination payment deductions

The person’s weekly salary is $600. They resign and are owed 5 weeks in unpaid annual leave.

We send a Section 72A notice for a lump sum amount of $962.

Total annual leave payment $3,000
Child Support deducted $962
Pay remaining $2,038

The deducted amount of $962 must be paid to us within 7 days of making the deductions.

Tax must be deducted from the gross payments and should be made before child support deductions. As tax deduction requirements may vary for lump sum payments they have not been included in this example.

Page last updated: 12 February 2016

This information was printed Friday 9 December 2016 from humanservices.gov.au/business/enablers/deductions-under-notice-pursuant-section-72a It may not include all of the relevant information on this topic. Please consider any relevant site notices at humanservices.gov.au/siteinformation when using this material.